December 18, 2013 / 12:05 AM / in 4 years

Independent Scots would face 1.6 bln stg tax shortfall - UK government

LONDON, Dec 18 (Reuters) - Scottish taxpayers could face an annual bill of 1.6 billion pounds ($2.6 billion) to pay for three policy commitments of the Scottish government if the country votes to leave Britain, the finance ministry said on Wednesday.

Scotland’s First Minister Alex Salmond, who leads the pro-independent Scottish National Party, released his blueprint for ending the country’s 306-year-old union with England last month.

He said an independent Scotland would take charge of its own finances, raising taxes and spending revenues from North Sea oil and gas reserves as it sees fit.

The country’s 5 million people will vote on independence next September. Just over half of Scots oppose the idea, while 33 percent are in favour, a recent opinion poll showed.

Britain’s finance ministry said it had calculated the cost of extending childcare, cutting air passenger duty by half and reducing corporation tax by up to 3 percentage points, and found an independent Scotland would need to find about 1 billion pounds of additional tax revenue or spending cuts by the end of the first parliament.

That would rise to about 1.6 billion pounds by the end of the second parliament, it said, equivalent to the combined annual budgets of the Scottish police and fire services.

It said the spending promises came against the backdrop of the government’s independent Office for Budget Responsibility (OBR) revising down its forecast for North Sea oil and gas receipts.

“The OBR has revised down North Sea oil and gas forecasts by 3.5 billion pounds over the next three years,” Chief Secretary to the Treasury Danny Alexander said in a statement.

“Instead of needing to cut spending - as Scotland would have to as an independent country - the Scottish Government will actually see its budget rise by more than 300 million pounds over the same period.”

Scotland’s Deputy First Minister Nicola Sturgeon said Alexander’s figures were “all over the place”.

“In September, the No campaign were claiming a funding gap of 32 billion pounds, by last month that had shrunk to 10 billion pounds, and now they are saying it is 1.6 billion pounds. All these figures are wrong, but at this rate even the No campaign will be predicting a healthy surplus by the time the referendum arrives,” she said.

“This analysis completely ignores the dynamic impact of the policies we are proposing to increase economic activity, which will boost growth and tax revenues.”

Britain’s three main UK-wide political parties have been campaigning on the economic risks of a solo Scottish economy, which at about 150 billion pounds accounts for about 8 percent of Britain’s total.

Recent claims from the pro-unionist camp include a warning that Scotland would need to raise taxes and cut spending as North Sea oil revenues decline and its population ages, and a charge that independence would complicate cross-border pensions. ($1 = 0.6157 British pounds) (Reporting by Paul Sandle; Editing by Hugh Lawson)

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